We use
panel data on S&P 1500 companies to identify external network connections
between directors and CEOs. We find that firms with more powerful CEOs are more
likely to appoint directors with ties to the CEO. Using changes in board
composition due to director death and retirement for identification, we find
that CEO-director ties reduce firm value, particularly in the absence of other
governance mechanisms to substitute for board oversight. We also find that
firms with more CEO-director ties engage in more value-destroying acquisitions.
Overall, our results suggest that network ties with the CEO weaken the
intensity of board monitoring.

We find strong
evidence that three key dimensions of national culture (trust, hierarchy, and
individualism) affect merger volume and synergy gains.The volume of cross-border mergers is lower
when countries are more culturally distant. In addition, greater cultural distance
in trust and individualism leads to lower combined announcement returns. These
findings are robust to year and country-level fixed effects, time-varying
country-pair and deal-level variables, as well as instrumental variables for
cultural differences based on genetic and somatic differences. The results are
the first large-scale evidence that cultural differences have substantial
impacts on multiple aspects of cross-border mergers.

We show that business microloans to U.S.
subprime borrowers have a very large impact on subsequent firm success. Using
data on startup loan applicants from a lender that employed an automated
algorithm in its application review, we implement a regression discontinuity
design assessing the causal impact of receiving a loan on firms. Startups
receiving funding are dramatically more likely to survive, enjoy higher
revenues and create more jobs. Loans are more consequential for survival among
subprime business owners with more education and less managerial
experience.

We propose and test a view of corporate
diversification as a strategy that exploits internal information markets, by
bringing together information that is scattered across the economy. First, we
construct an inter-industry network using input-output data, to proxy for the
economy's information structure. Second, we introduce a new measure of
conglomerate informational advantage, named "excess centrality",
which captures how much more central conglomerates are relative to specialized firms operating in the same industries. We find
that high-excess-centrality conglomerates have greater value, and produce more
and better patents. Consistent with the internal-information-markets view, we
also show that excess centrality has a greater effect in industries covered by
fewer analysts and in industries where soft information is important..Online
Appendix

We document a trend towards
fewer and more-focused conglomerates, and develop a model that explains these
patterns based on increasing technological specialization. In the model,
diversification adds value by allowing efficient within-firm resource
reallocation. However, synergies decrease with technological specialization,
leading to fewer diversified firms over time. Also, the optimal level of
technological diversity across conglomerate divisions decreases with
technological specialization, leading to more-focused conglomerates. The
calibrated model matches the evolution of conglomerate pervasiveness and focus,
and other empirical magnitudes: growing output, level and trend of the
diversification discount, frequency and returns of diversifying mergers, and
frequency of refocusing activity.

How do market prices become distorted? We find evidence of systematic
optimism and pessimism among credit analysts, comparing credit ratings for the
same firm at the same time across rating agencies. These biases carry through
to spreads on firms outstanding debt and yields on new public debt issues.
They also negatively predict future changes in credit spreads, consistent with
mispricing. These inefficiencies in turn affect corporate policies: firms
covered by more pessimistic analysts issue less debt, lean more on equity
financing, and experience slower revenue growth. We also identify specific
analyst traits that predict rating quality. MBAs provide less optimistic and
more accurate ratings; however, optimism increases and accuracy decreases with
tenure covering the firm, particularly among information-sensitive firms. Our
analysis uncovers a novel mechanism through which debt prices become distorted
and demonstrates its effect on real corporate decisions.

This paper shows that managers
are influenced by their social peers when making corporate policy decisions.
Using a matrix of social ties from current and past employment, education, and
other activities for US executives and directors, we find that more social
connections two companies share with each other, more similar their capital
investments are. To address endogeneity concerns, we find that two companies
invest less similarly when an individual connecting them dies. The results
extend to other corporate finance policies. Furthermore, companies positioned
centrally in the social network invest in a less idiosyncratic way, and exhibit
better economic performance.

This paper examines
the sensitivity of stock prices to dividend changes. The Dividend Signaling,
Free-Cash-Flow, Maturity and Catering Hypotheses all predict an average
positive (negative) reaction to announcement of a dividend increase (decrease).
However, these hypotheses have different cross-sectional predictions. This
paper documents that the positive stock price response to dividend increases is
due primarily to the signaling of higher future earnings, to the managers
catering to the time-varying premium assigned by the market to dividend paying
stocks, and partially to the reduction of agency problems. By contrast, the negative
price response to dividend decreases is mainly due to the transition from a
mature life-cycle stage to a decline stage with higher systematic risk, as
maintained by the Maturity Hypothesis.